Fed Advise Companies to Work With Defaulters
The Federal Reserve and other banking regulators issued special guidance Tuesday, advised loan service companies to work with borrowers on the verge of defaulting on their home mortgages. The aim of this guidance was to address the problem that in many cases the company in charge of collecting monthly mortgage payments is not the same company that originated the loan.
The guidance suggested that appropriate strategies to avert defaults could include modifying the terms of the loan or deferring payments. In the statement by regulators:
In addition, institutions should consider referring appropriate borrowers to qualified home ownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.
